DESCRIPTION: The proposed project focuses on the performance of local hospital systems (referred to as strategic hospital collectives or SHCs). SHCs are defined as two or more hospitals in the same MSA that are in the same system or network. Performance is measured by financial variables--cash flow per bed and revenue and cost per adjusted discharge--and by technical efficiency scores derived from data envelopment analysis (DEA). These performance measures will be dependent variables in regression models, estimated at the hospital, SHC, and metropolitan statistical area (MSA) level. The independent variables will be measures of market structure and local environment, and depending on the particular dependent variable, hospital characteristics and characteristics of the SHC. Market structure variables include measures of concentration in the hospital market, HMO penetration, and the presence of large purchasers. The proposed data envelopment analysis would probably be the first to examine technical efficiency at the level of the hospital system or MSA. The analysis will use two outputs (adjusted discharges and outpatient visits), and four inputs (beds, a count of services offered, non- physician FTEs, and non- payroll, non-capital operating expenses). Primary interest is in the relationships between market structure variables and performance measured at the hospital, SHC, or MSA level, and on the relationships between SHC characteristics and performance at the hospital or SHC level. The analysis will make use of a unique national data set assembled by the investigators that tracks local hospital systems.